Question

5) In the OmniPower Bars scenario, your business objective, to determine the effect that price and in-store promotional expenses will have on sales, calls for examining a multiple regression model in which the price of an OmniPower Bar in cents (X1) and the monthly budget for in-store promotional expenses in dollars (X2) are the independent variables and the number of OmniPower Bars sold in a month (Y) is the dependent variable. The data has been collected from a sample of 34 stores in a supermarket chain selected for a test-market study of OmniPower. The data is organized and stored in OmniPower.xlsx file.

(a) State the multiple regression equation.

(b) Interpret the meaning of 1 and 2, in this problem. Significance/Meaning of 1: ____________________________________________________ Significance/Meaning of 2: ____________________________________________________

(c) What is the significance of 0? Significance/Meaning of 0: ____________________________________________________

(d) Predict the mean sales for a store charging $0.69 during a month in which promotion expenses are $300.

Answer 1

(a) The multiple regression equation is:

Y = 5,837.5208 -53.2173*X1 + 3.6131*X2

(b) For every addition in the price of an OmniPower Bar in cents, the number of OmniPower Bars sold in a month will decrease by 53.2173.

For every additional monthly budget for in-store promotional expenses in dollars, the number of OmniPower Bars sold in a month will increase by 3.6131.

(c) There is no meaning of y-intercept because the independent variables cannot be constant.

(d) Y = 5,837.5208 -53.2173*0.69 + 3.6131*300 = 6884.72

	R²	0.758
	Adjusted R²	0.742
	R	0.870
	Std. Error	638.065
	n	34
	k	2
	Dep. Var.	Sales
ANOVA table
Source	SS	df	MS	F	p-value
Regression	3,94,72,730.7730	2	1,97,36,365.3865	48.48	2.86E-10
Residual	1,26,20,946.6682	31	4,07,127.3119
Total	5,20,93,677.4412	33
Regression output				confidence interval
variables	coefficients	std. error	t (df=31)	p-value	95% lower	95% upper
Intercept	5,837.5208
Price	-53.2173	6.8522	-7.766	9.20E-09	-67.1925	-39.2421
Promotion	3.6131	0.6852	5.273	9.82E-06	2.2155	5.0106